Taiwan’s rapid and successful economic development has attained global recognition. Government policy has been instrumental in expanding the scale and profitability of industries in the private sector. Government policies have also facilitated the growth of public sector industries enabling them to help fuel the growth of the entire economy. Nevertheless, in Taiwan as in other countries regardless of ideological preference, public enterprises have encountered problems in the areas of personnel and financial management.
The purposes of this study are fourfold: (1) To utilize accounting data to investigate the financial status of public enterprises under the authority of the Economic Ministry; (2) to trace the relationship between the financial status of each public enterprise and government policies related to enterprise management; (3) To make a comparison between the financial statuses of public and private enterprises; (4) To offer suggestions or future policies concerned with the management of public enterprises.
Our findings indicate that while the prices of products produced by public enterprises have been regulated to stabilize general price levels some public enterprises have suffered on account of price controls. Two prominent examples are the Taiwan Fertilizer Company which has been unprofitable due to low fertilizer prices and the Chinese Petroleum Corporation which has shown similar losses due to government controlled prices for petroleum and petroleum products. A related finding is that whether government price policy has been successful in its price stabilization objective or not, private enterprises have always been more efficiently managed than their public enterprise counterparts producing a similar good. Because of this latter finding, we thus question the personnel management of public enterprises and suggest that public enterprises can only display production efficiency if managed by experts.
